With more and more owners looking to capitalise on the growing domestic holiday market in the UK, we are seeing a big growth in people looking for advice into diversifying from farming and other rural businesses into running holiday lets.
The most frequent question asked when new owners who are planning to convert a barn or outbuilding into a holiday let is should you convert a large dwelling into a number of smaller properties or leave it as one large house?
The latest figures from visit Britain show that the inbound tourism market for holidays in the UK is on the increase. Even with this increase, the domestic market is still the strongest and accounts for 80% of the bookings made with us.
GB: 2016 = 52.741, 2017 = 55.907, % = +6%
England: 2016 = 42.393, 2017 = 44.587, % = +5.2%
GB: 2016 = 182.32, 2017 = 192.063, % = +5.3%
England: 2016 = 140.994, 2017 = 149.467, % = +6%
GB: 2016 = £12,515, 2017 = £13,361, % = +6.8%
England: 2016 = £9,865, 2017 = £10,417, % = +5.6%
With this in mind, the first thing to consider is what market you want to capture? If you have a number of buildings or one large building you may chose to look at converting these into small units to appeal to the mass market. The other option would be to convert the whole building into one large unit and attract groups of guests looking to celebrate an occasion or birthday. There are less large properties which can make them more desirable but the most demand is for the most luxurious standard as people are wanting something special to celebrate in. To look at each separately:
Often owners like this option as it gives a greater feeling of safety for income once the properties are up and running. If for example you have 3 properties all sleeping 4 people you can attract groups of 4, 8 or 12 giving you great flexibility. Most of these types of properties are seasonal with school holidays in great demand and with the different sizes on offer, the chances are at least one will always be rented bringing in income. Guests looking at booking these types of properties are looking at the location and what they can do in the area.
Something to consider when developing multiple properties is the cost of setting them up as you will need to buy multiple fixtures such as kitchens. Preferably you will also need to ensure that at least two of them can be opened up to form one larger living unit so that all your guests, if staying as one group, have somewhere to socialise together. And lastly, the market for cottages that sleep 1-4 is crowded, with the majority of holiday house (in our case 55%) in this size, so ensuring your properties stand out from the crowd is a must.
The alternative is to leave your property as one big celebration house to attract the group accommodation market. These houses are busy at weekends all year round with less demand for week-long stays. Rental for a weekend usually works out at about 70%-80% of a weekly rental so the income is sound.
The good thing about converting into a bigger property that sleeps more guests is there are less on the market and people looking to book these are interested in the distance from there home. We find that 2 hours from their home is about as far as people will drive for a weekend. This market are looking for a one-stop shop and special treats and experiences are part of what they are seeking - our experiences and concierge team are able to manage this for you. You will also need to think about swimming pools, hot tubs, tennis courts, games rooms etc as most guests stay put and enjoy their surroundings with their family and friends rather than going out and about visiting. You will also need to consider taking pets and ensuring the sleeping arrangements are as flexible as possible in order to attract the guests.
When looking at converting a building into a holiday let you need to ask yourself a number of questions:
What is the budget? How involved to you want to be with running it? What impact will it have on any business you are running on the same site? Is this a short, medium or long-term business plan? Is there something unique or different that will make your property stand out or can you create something when converting?
Please do call us, we have lots of experience at Mulberry which our property team are very happy to share with you or we can visit and give you some free advice before you start your renovations - all to get you on the right track.